Nearly every industry at this point has been affected by the digital revolution. Big businesses are being called to task by an ever-growing empowered consumer. The real estate industry is no different.
In October of this year, consumers triggered a landmark trial resulting in the National Association of Realtors (NAR) and large residential brokerages being indicted for approximately $1.8 billion in damages for conspiring to keep commissions for home sales artificially high.
The ruling underscores a power shift, spurred by the arrival of home listing sites that give consumers access to information that was once kept under real estate professionals’ purview.
Bolstered by the transparency, consumers are now questioning the fundamentals of a real estate transaction, including the long-held status quo of home sellers divvying up the profit from their home’s sale to pay buyer agents’ commissions.
Regardless of whether or not NAR appeals the October verdict, the aftermath promises to evolve the way buyer agents are compensated. Without the guarantee of payment upon a contract’s closing, industry experts are anticipating buyer agents will need to conduct more intentional conversations with their clients about commission.
In one proposed scenario, agents will initiate a pre-contract conversation with buyers, outlining their services and negotiating a fair price for their compensation.
Amid these changes, buyer agents need support. A buyer-funded commission is likely to lead to increased transparency and early negotiations, meaning buyer agents will be required to clearly communicate the value they bring to the buying experience.
It’s not just a call to action for agents. How brokerages, vendors, and MLSs choose to respond will be essential to buyer agents’ long-term sustainability, as well.
Tech companies are already in go-mode, analyzing buyer agent workflows to see where automation can reduce friction. For proptech innovator, SkySlope, they’ve begun brainstorming new workflows to fill buyer agreement forms while proposing resources to help agents negotiate their compensation.
SkySlope and MLSs such as REcolorado and Toronto Regional Real Estate Board (TRREB) see the offers process as another opportunity to equip agents with insights that can augment their value to clients
TRREB intends to give more visibility into competing offers using SkySlope Offers. This transparency allows agents to better inform and position their buyers for success.
Offer Insights is a feature putting market data at agents’ fingertips. Embedding directly in SkySlope Forms, it scans for areas where entered information falls outside of current market standards. For instance, abnormally long closing date deadlines or low earnest money deposits will trigger a digital pop-up, alerting agents of the offer’s potential lack of competitiveness in this area.
For new agents, Offer Insights is an extra layer of insurance that strengthens reputation. For experienced agents, it’s a spot-check that ensures they deliver concierge-grade service to clients who, for the first time, may be reaching into their own pockets to pay their commission.
These proposed solutions provide a model for other organizations. In the midst of its own transmigration, the MLS is in the perfect space to expand its value by offering meaningful and relevant technology solutions to agents.
Be it the solutions mentioned above or something yet to be committed to code, the industry should respond by empowering the buyer agent, allowing them to adapt to a changing landscape.
With the collaborative support of vendors, brokerages, and organizations, buyer agents will continue to offer meaningful value to their clients. Offering viable solutions amid a time of change accentuates these organizations’ worth, diminishing the threat of impending irrelevance that exists for all of us in an AI-powered world.
About SkySlope
Established in 2011, SkySlope is the customer experience platform managing real estate transactions from contract to close. Serving over 760,000 real estate professionals across the U.S. and Canada, SkySlope manages nearly 3 million transactions annually. SkySlope is on a mission to build solutions that reshape the real estate industry by creating the most powerful autonomous transaction platform. For more information, visit SkySlope.